Caterpillar whiffs on earnings and slashes its forecast for the year

Caterpillar reported first-quarter earnings that were weaker
than forecast, and lowered its expectations for the rest of the
year.

The industrial-machinery maker posted $0.67 in adjusted
earnings per share (EPS), and revenues of $9.5 billion.

According to Bloomberg, analysts had estimated that Caterpillar
earned $0.68 in EPS, roughly the midpoint of the range it
earlier projected, and revenues of $9.39 billion.

The company warned in March that its
sales and earnings would drop amid low commodity prices, weak
demand and the strong dollar. Its estimates for sales and profits
trailed analysts' forecasts at the time.

Caterpillar CEO Doug Oberhelman said in the
earnings statement that sales dropped substantially in oil
and gas, mining and rail.

He noted the recent improvement in commodity prices
and in construction-equipment sales in China, but other parts of
the business remain challenged. And that's why the company has
lowered its forecast for 2016 profits.

Caterpillar cut the midpoint of its forecast for full-year
adjusted EPS. It now projects $3.70, down from $4, but higher
than the consensus estimate for $3.61.

Caterpillar also expects to spend more on restructuring this
year, with a new forecast of $550 million, up from $150
million.

Caterpillar shares fell by as much as 3.4% in pre-market
trading.

On Thursday, the company reported another set of ugly
3-month rolling sales data, showing that the commodities
crash is still taking its toll.

Because Caterpillar's products are used for expensive capital
projects worldwide, it is often used as a bellwether of the
manufacturing and global economy.